J$30b Government stash - CTMS to locate, unlock idle funds
Published:Friday | February 18, 2011 | 12:00 AM
A senior technical officer in the Ministry of Finance says the Central Treasury Management System (CTMS) now being developed for Jamaica will provide the tools to track Jamaica's financial resources more efficiently, allowing the Government to craft a more 'spot on' budget, once fully implemented.
Under the CTMS, the Accountant General's Department will assume the full responsibility for the handling of Government's cash.
"If the budget is incorrect, the CTMS will expose it. So, if we have a budget that is based on highly optimistic revenues, then the expenditures that are predicated against those revenues cannot be met," said Devon Rowe, director general of the Ministry of Finance and the Public Service, as he pointed out that that would force the Government to make a significant contraction in expenditure.
Rowe said once the CTMS is in place, Government is less likely to engage in unnecessary borrowing to fund its operations.
Unnecessary borrowing
He said a recent inventory conducted by his ministry showed that the Government had more than 5,000 bank accounts with funds totalling J$30 billion.
"But some of those accounts are not accounts that Government has access to. As a result of this lack of access, Government again engages in this unnecessary borrowing," he said, making a case for the need for the CTMS while addressing an Innovative Professional Incorporation seminar at the Management Institute for National Development in Kingston.
"In some cases, balances sit idle in these accounts. Government does not have access to the fund and, in addition, where special funds are created, those entities engage in what we would consider entrepreneurial activities, so they engage those funds in government papers, further worsening the debt," he added.
But asked later to clarify how much of the funds were inaccessible, Rowe said on Thursday that the J$30-billion figure was an estimate not meant for publication and that the amount in the accounts could be lower since funds are often in transit, while some of the money would have financed the raising of debt.
Citing other benefits of the CTMS at the Wednesday forum, Rowe said there would be improvement in cash management immediately because Government would have access and sight of all its cash at one time, and would be able to make payments as they are appropriate.
He said the CTMS would make the Government more efficient and, as such, would help the administration to save billions of dollars annually, by cutting down on early payment to accounts.
"Instead of taking four days to make payment to salary accounts, we are cutting it to two days because of virtue of excess resources being out there in the banking system before it is required, sitting into bank accounts. We could actually be saving J$140 million a year," he said.
Rowe said the process of implementing the Jamaican CTMS has already begun, and should be finalised in another two years. The process, he said, normally take five years or even eight years when building the system from scratch.
"For the first quarter of next fiscal year, we are going to be rolling out one entity in Government. I think we are going to start with the finance and accounts department of the Accountant General's Department; and it is logical for us to be there because the treasury model will be [centralised] there," said the finance ministry official.
"They also need to learn what the potential challenges are, and we hope to fix the problems there," he said.
Other departments to follow are the ministries of finance, transport and works, and education; and later, the executive agencies.
Not all public-sector bodies' funds will be incorporated in the CTMS. National Housing Trust, National Water Commission, Petroleum Corporation of Jamaica and the Registrar General Department are excluded.
Addressing the issue of dislocation that would occur during the implementation of the system, Rowe said this would be minimal.
"The CTMS will not do massive dislocation, but it is going to free up persons," he said. "Our initial assess-ment says that there could possibly be a one per cent adjustment; we think it is very minor. What is likely to occur is that their function will also change. Cheque writing will discontinue."
Rowe said the Cabinet would soon be signing off on recommendations to rehouse the offices of the Accountant General, but declined to say where it would be located.
"We have identified a location and we are at early stages in terms of doing assessments and designs to cost it. We anticipate that some of the cost will be next year's budget, and I hope that they will be in the new building before the end of this calendar year," he said.